Decision on merits of PSNH scrubber goes back to PUC

By GARRY RAYNOState House BureauNovember 20. 2013 8:31PMCONCORD — State regulators will continue investigating how much Public Service of New Hampshire's customers will have to pay for the $422 million emissions scrubber at Merrimack Station after the state Supreme Court earlier this month declined to accept PSNH's appeal.

The court said it would not accept the appeal before the Public Utilities Commission issues a final order or decision in the investigation of whether PSNH's investment in the scrubber was warranted and how much customers should pay.

PSNH appealed to the Supreme Court in September, questioning whether the PUC had the authority to determine if the scrubber should have been installed in light of a state law requiring it be built.

The PUC suspended its investigation until the court decided on the appeal, but issued a new schedule this week giving interveners about a month to submit testimony.

PSNH spokesman Martin Murray noted the Supreme Court did not rule on the merits of the case and instead said the process should continue before the PUC, which is where the company will continue to advance its arguments.

"It is clear to everyone that the Legislature mandated construction of the scrubber, and the PUC has affirmed that mandate over the years," Murray said.

"PSNH complied with the law in building the scrubber," he said. "It certainly seems to defy logic, and the law, that some would like to see the PUC now go back and question whether the scrubber should have been built in the first place."

Catherine Corkery of the N.H. Sierra Club, an intervener in the proceedings, said the court's decision means the people with the expertise will be determining if PSNH's investment in the scrubber was prudent.

"The decision shows the court trusts the procedure and that there are still things that need to be ferreted out," Corkery said, "and the PUC are the ones to do it."

She said her organization is looking for transparency.

"Unfortunately, PSNH is telling the Legislature, 'We need the PUC to address issues of ownership of our facilities, that they are the smart guys and given the task of making these decisions,' " Corkery said. "And on other side of the coin, running to the Supreme Court and saying the PUC is not doing it right. That is really disingenuous."

Senate Majority Leader Jeb Bradley, R-Wolfeboro, who is also a member of the Electric Utility Restructuring Oversight Committee, said the court made the right decision to allow the process to go forward.

He said there are a number of issues that need to be explored, including how the price went from $175 million, to $250 million to $422 million.

The state's largest utility also asked the court to determine if the law passed in 2006 requiring the scrubber precluded the PUC from deciding otherwise.

And PSNH asked the court to determine if its due process rights had been violated by the PUC issuing conflicting, arbitrary and unreasonable orders of the scrubber's construction and the company's ability to recover that cost from ratepayers.

The court said it would not act on that request as well in its order issued Nov. 6.

PSNH maintains the state law allows full recovery from electric users for the cost of the scrubber. The company is currently charging electric customers for the scrubber's cost.

If the PUC decides the company does not warrant full recovery, the utility's shareholders will have to shoulder some of the cost.

But those arguing against full recovery say PSNH had an obligation not to spend money on something that does not make economic sense with the current changing electric marketplace.

The low cost of natural gas has reduced the price of electricity to less than what it costs PSNH to produce it using its fossil-fuel burning plants.

The high cost of PSNH's power has driven consumers large and small to alternative providers. The utility has lost about 55 percent of its electric load to competitors, including 22 percent of its residential and small-business customers.

Because PSNH can only recover the cost of the scrubber from its electric customers, that means higher costs for fewer and fewer customers. The utility's transmission and distribution customers do not pay for the scrubber.

Because of the high electric costs for PSNH's power customers, lawmakers asked the PUC to determine whether customers would be better economically, if the utility were forced to sell its three fossil-fuel burning plants.